While HR has been busy transforming itself to a strategic role, the CEO’s hr wishlist has kept growing

Ever since the publication of McKinsey’s ‘War for Talent’ research, chief executive officers and business leaders have emphasised the need for their organisations to manage and leverage their human capital by effectively attracting, developing and retaining talent, in line with the organisation’s objectives and direction. The world of business since then has grown, both in size and in complexity. Complex and large projects require large teams, which more often than not are diverse both geographically and culturally, and compose of people across a variety of educational backgrounds. Technology today has also made it possible for teams to work together virtually without ever having to have in-person interactions. HR faced a daunting challenge. The need of the hour was to develop HR professionals who were not only skilled in their domain, but would have enough knowledge and expertise to be able to contribute to a marketing manager, or a finance director’s talent management needs at the input level. It was then imperative that the HR function, as it stood in yesteryear, had to relook and revamp its roles to help large and complex organisations in making human capital a key strategic advantage over competitors. From where HR was, to what it needed to be, was a paradigm shift from being merely administrators of decisions made by others to becoming key decision-makers affecting business outcomes. HR leaders succeeded to a great extent and most business leaders today believe that the HR is making exceptional contributions in strategic areas, including talent management, succession planning, engagement, recruitment and retention and that senior HR executives have done a great job in their role of a business partner.

The business world, however, has been changing faster than ever, with significant shifts in scope and character. Organisations are learning to deal with disruptive technology, shifts in economic power, talent mobility and black swan phenomenon. Naturally therefore, while HR has been busy transforming itself from the tactical to the strategic, and has deservedly received ‘a seat at the table’, the CEO’s wishlist from the HR function has kept growing. Business leaders today expect HR managers to have a much deeper understanding of business over and above their essential HR skills. Read More...

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Who will be Deutsche Bank’s New CEO?

Deutsche Bank’s CEO Josef Ackerman is Opposed to The Idea of The Non-German Speaking Anshu Jain becoming his Successor. Reason – he finds Jain Unsuitable and has his Own Choice for Crown Prince. For The $55 billion giant, This may Prove The First Step to Losing The Future.

For a CEO who has spent the last ten years of his life shuttling between time zones, “comfort” is never an option. Josef Ackerman, the 63 year-old CEO of Deutsche Bank (DB), in a matter of a week, on average, touches down in at least seven countries. Talk of peregrination. And for critics who classify his living out of a suitcase act – in the comforts of Presidential suites & chartered planes – a leisure-filled populist gambit, here is some delicious inside bit of a half-day-long act which proves how he is not sleepwalking towards his goal of making the $55.17 billion-worth entity bigger. The second Thursday of February this year, saw him begin his day at 7:45 am with a business breakfast with some Chinese bankers in Hong Kong. Despite having flown-in an hour past midnight, the previous night from Malaysia, there showed no wrinkle of fatigue on Ackerman’s face. The meeting was followed by a brief interview with CNN, and a couple of one-on-ones with high net-worth customers of DB. Other pre-lunch sessions included a quick interaction with the bank’s Southeast Asian head Rob Rankin (and some managers at the company’s Hong Kong office) at the International Commercial Centre, and a moderately long one with Li Ka-shing, the $26 billion-worth Asian businessman. There was one final appointment planned for the day before he had to head straight to the airport (to fly back to Frankfurt). At precisely five past twelve, he walked out of a black Mercedes at the main entrance of Hotel Conrad. The Ballroom was where he was headed. He had to address a mix of entrepreneurs, businessmen, some bankers and a few chosen Germans. 30 minutes later, he was out. To be fair, Ackerman squeezes in more events during an “ordinary” working day than an “ordinary” CEO. That he is trying hard is obvious. But is he doing enough? That bright-socked, tin whistle-blowing pony-tailed lady shareholder who disrupted proceedings at the 2011 AGM (May 26, 2011, at Frankfurt) – while reacting to Ackerman’s failure to clarify doubts over his successor – certainly would disagree.

Ackerman has parented the German bank for 15 long years. The long hours and his tireless attitude justify his commitment all right. But in discipline, he falls short. Emotions have got to him. Nine years after occupying the top spot, he is still found biting his nails when questioned about his successor – an answer which he should have had ready as early as the fall of 2009 (when he was initially scheduled to retire). But his contract was renewed till the AGM of 2013 for lack of succession planning. Expectedly, with less than 24 months to go before he finally steps down (he has to; 65 years is the mandatory retirement age at DB and he is 63), the worried shareholders have gone aflutter over who will fill his shoes. There are more guesses than one and despite claims of having put in place a “clearly structured process” to zero-in on the next CEO, the obvious fact is – the company is scrambling, with no conclusion in sight.

Bad news is – the CEO and shareholders stand divided over who should be handed over control of DB. Of those most likely to get lucky – including names like Hugo Bänziger (Chief Risk Officer of DB), Hermann-Josef Lamberti (COO), Stefan Krause (CFO), Reto Francioni (Head of Deutsche Boerse), and Paul Achleitner (CFO of Allianz, Europe’s largest insurer) – insider Anshu Jain (head of the company’s Corporate and Investment Banking division) & outsider Axel Alfred Weber (fr. President of Germany’s central bank, the Bundesbank) are the clear favourites. Trouble is – despite English being adopted as the official language of communication during all intra-management and shareholder meetings (since DB bought the Bankers Trust in 1999 for $9 billion), Ackerman is strongly opposed to the fact that the non-German speaking Jain can adapt to and take forward the Franfurtian-ideology & legacy of the bank. He is an Indian-born, British citizen by choice candidate, and his London-mannerisms are presumably not something that will please the political circles in Germany. On the other hand, Weber, a German, given his long career spanning three decades in the country, understands politics & the state of the domestic macro-economy. Given this, Weber should be the winner hands down. Actually, no.

Sometimes, even clamouring shareholders display a higher sense of intelligence. This is one such instance. Ackerman, despite wanting an experienced insider as replacement, is not convinced about Jain. To understand why he is sitting on the wrong side of logic, a little math is in order.

The German, non-German divide. Many understand that since Ackerman joined Deutsche in 1996, he has encouraged a culture of globalisation. Result – as compared to 1995 (when Jain joined the bank to head the nascent markets business), the company has grown into a global institution. In FY2010, only 25% of the company’s revenue came from German customers. Considering that this value has decreased phenomenally from 70% in 1995, this is a trend which deserves a radical change in mindset. A question. If at present, a German-speaking “global” CEO can be put in charge of a business which makes only 25% of its topline from the German market, what is so sinful about allowing an English-speaking Brit to look after the same business, which makes 75% of its topline from non-German markets (largely consisting of US, Central & Eastern Europe, UK and Asia – markets which speak English-at-large)? Perhaps Ackerman wants to avoid hurting the “sentiments” of his “German-speaking” employees. But even on that front, there appears no concrete evidence. Of the 102,602 full-time employees (FY2010) at the company, 73.33% are present in markets outside Germany. Even a majority of its shareholders (count of 640,623; institutional and private entities) – 54% to be precise – are non-Germans. Customer-wise, employee-wise, shareholder–wise, all indicators cry out to justify why the word “global” appears precisely 194 times in the company’s 2010 Annual report. And Ackerman (who himself is a Swiss-born) is still unwilling to grant a non-German a shot at the crown of being the face of this (as the company claims) “meritocratic tradition and culture”?

Read more....

Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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